In the hotel’s case, the tax tribunal found wedding regulations prevented the legal right to exclusive use of a space that had been hired by a customer.

As the room was provided with a right to hold a civil wedding ceremony, this meant there was no simple “passive” letting of land.

“Owners of private properties, including country properties and estates, who let rooms for weddings, or indeed who let any space for ceremonies, should pay close attention to this ruling,” said David McGeachy, partner at Saffery Champness.

Package

HMRC had argued letting land for wedding ceremonies was a package, said Mr McGeachy.

Landowners would, for example, give support in setting up the venue, recommending caterers, cleaning and car parking, which meant the rental income was no longer passive.

“On the basis of this ruling, where a license to hold such ceremonies has been issued, it is now clear that VAT also needs to be added to the hire cost of these rooms, and that will certainly increase the cost to those hiring the property for such events.”

Farmers should be aware that hiring out a room or land for business purposes was still exempt VAT, added Mr McGeachy.

But any situation where the farmer overwhelmingly provided a service for use of their property, was not exempt.